This case examines the decision by the Swiss pharmaceutical Roche Holding AG (Roche) to offer a record $42 billion bond in February 2009. In light of a pending acquisition of U.S. biotechnology leader, Genentech, Roche management planned to sell $32 billion in bonds at various maturities from 1 year to 30 years and in three different currencies (U.S. dollar, euro, and British pound). In a context of substantial uncertainty in both world financial markets and the value of the Genentech deal, students are introduced to the pricing of corporate bonds by being invited to price Roche's bold global offering.
The case is designed to introduce the concept of a risk premium and to accomplish the following potential additional teaching objectives: 1. Motivate the concept of a risk premium and the notion of a cost of debt by exposing students to estimating default risk, credit ratings, and credit spreads 2. Review yield curve principles and mechanics 3. Practice bond math and credit market terminology 4. Establish institutional detail for the public security offering process 5. Introduce the risk-return paradigm in finance
...this. The fall in legal trade barriers can create both opportunities and threats. Organisational culture Organisational culture describes the set of beliefs, expectations, values, norms, and work routines that influence how members of an organisation relate to each other and work together to achieve organisational goals. When members share an intense commitment to goals, a strong organisational culture exists. When the opposite is true, the organisation’s culture is weak. When an organisation’s culture is very strong it is often referred to as the organisation’s ‘personality’ because it influences the way its members behave. Organisational culture is an important way of managing the environment for two reasons. First, it makes management possible in situations where managers cannot be constantly supervising employees. Second, and more importantly, when a strong and cohesive set of organisational values and norms is in place, employees focus on thinking about what is best for the organisation in the long run—so all their decisions and actions become oriented towards helping the organisation perform well. Values and norms: Creating a strong organisational culture Values are beliefs and ideas about the kinds of goals members of a society should pursue, and about the kinds or modes of behaviour people should use to achieve these goals. Norms are unwritten, informal rules or guidelines that prescribe appropriate behaviour in particular situations....